Think Enhance, Not Replace, When Considering SaaS - InformationWeek

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Commentary
4/2/2009
11:51 AM
David Linthicum
David Linthicum
Commentary
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Think Enhance, Not Replace, When Considering SaaS

When considering SaaS products such as Salesforce.com, NetSuite.com, or any of the 2,000-plus smaller SaaS players, the focus should be on leveraging pre-built business processes and not replacing existing core business systems...

One could view SaaS as a legacy technology when considering the number of years it's been out there and how it has become part of the modern enterprise. However, when looking at SaaS, or, in most instances, considering more SaaS, it's a good idea to put things into clear perspective.

For those tasked with maintaining existing IT infrastructure, including major systems and information stores, the subject of SaaS can be a bit scary. Typically they talk about "replacement," and how all things bad will be solved by all things SaaS. Having gone through one IT revolution or another, you know better.The truth is that SaaS provides a great alternative to on-premise enterprise applications, however, it will take on more of a "value added" strategy over the longer term. Thus, when considering SaaS products such as Salesforce.com, NetSuite.com, or any of the two thousand smaller SaaS players, the focus should be on leveraging pre-built business processes and not replacing existing core business systems.

Here's why you should think enhance rather than replace:

First, the cost and risk of complete core business system replacement is typically much greater than any upside costs savings that will come from the use of a SaaS-delivered system. While your mileage may vary, and the SaaS guys will typically have another take on this, I'm talking about the majority of cases out there within midsized to large organizations that look at the issues around a core system replacement strategy using SaaS.

Second, SaaS has a tendency to be most successful in new and higher-value applications. In the case of Salesforce.com, for example, it's typically sold into organizations where there were no sales force automation systems in place, and the need for those systems bubbled up from those in field sales. Once they had a critical mass of users, centralized IT took over. There was no displacement, typically, thus little risk and a bunch of upside.

Finally, integration is typically an afterthought when considering SaaS. With centralized data management still an issue within most Global 2000 enterprises, the addition of a SaaS-delivered system has a tendency to make data management more difficult. If you're thinking replacement, be prepared to consider very costly data integration technology, or else the use of SaaS for core business systems will prove problematic.

This is not to say that SaaS should never replace core business systems. In some cases that will make sense. This is really about the big-picture strategy that should be in the minds of those looking at SaaS. I've found this to be a very polarizing topic. Either people are looking to replace each and every system using SaaS and cloud computing, or they are pushing back on the use of any Web-delivered resources for any application processing. The answer is somewhere in the middle.When considering SaaS products such as Salesforce.com, NetSuite.com, or any of the 2,000-plus smaller SaaS players, the focus should be on leveraging pre-built business processes and not replacing existing core business systems...

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